State is now dominant force in US Capital Markets!

[namascama]

Meanwhile… in that bastion of free market capitalism:

State is now dominant force in US capital markets
By Gillian Tett

By the time you read this column today, a fascinating shift will almost certainly have occurred in the nature of US finance: for the first time the government will be the biggest source of outstanding home mortgage and consumer credit loans in the US, eclipsing private sector banks or investors.

Or that, at least, is the forecast recently made by Investor Business Daily, a US publication. It recently crunched some Fed data and concluded that the volume of outstanding government-financed mortgage and consumer credit was running at $6,320bn in the US in the first quarter of this year – up from $4,400bn in late 2006. However, private credit provision was just $6,580bn, down from $8,480bn in 2006.

But behind this veneer of normality, banks are still deleveraging, and the private sector mortgage securitisation world remains almost dead. Indeed, were it not for the activity of Fannie Mae and Freddie Mac, the giant state institutions, mortgage finance would, in effect, have seized up in the past three years.

ft.com/cms/s/0/638185f8-a303-11e0-a9a4-00144feabdc0.html#axzz1QtgYrEFq